NEW YORK (Business 2.0) -
Google may not be the giant-killer it seemed before Tuesday. But the reaction to its earnings miss just makes it all the more critical that the company find new engines of growth far afield from its core business of search advertising.

Partners and analysts believe that Google (Research) is ready to plunge into the lucrative business-software market—and IBM (Research) may be the best partner to help it dive in.

Today, Google has few products for businesses. It sells a search engine appliance (a version of its search software bundled with a server machine, essentially). And it has partnered with IBM, Sun (Research), and EMC (Research) to integrate its desktop search software with their server products.

But Google already works with thousands of small and large businesses through its AdWords search-advertising program. And those customers could easily buy more than just ads from Google.

Getting serious beyond search

"I don't see them limiting themselves to search," says Marc Andrews, the director of strategy and business development in an IBM software unit who also oversees the current desktop-search partnership with Google. "That is why Microsoft and others are scared of them."

Industry watcher Frank Gens, a senior vice president at market research firm International Data Corp., argues that Google will get serious in enterprise software by partnering with existing software companies to help them bring their applications online. "My prediction is in the next 30 to 60 days you will see some big names pick up Google as a strategic partner around information management and search," he says.

Eyeing the success of Salesforce.com (Research), makers of enterprise software are thinking about how to deliver their software products through a browser, rather than through desktop software. Customers will want to simultaneously search all the data from multiple Web-based software applications—a natural role for Google. Likely partners include smaller enterprise software players who could benefit from Google's brand, and don't currently have an online offering of their own.

Software partnerships

What Google could offer these software companies is an online computing platform -- the bandwidth and servers it currently uses to serve up search results and ads. In Gens' thinking, Google would provide the infrastructure and team up with software companies who would write applications — from information and content management to business analytics — on top of that platform. Gens suggests that Google and its software partners will target small and medium-sized businesses. (Google would not comment on its plans).

What would this mean for current players in Web-based software, like Salesforce.com?

"In many ways, Google has already entered the enterprise market," says Salesforce.com CEO Marc Benioff. He points out that Google already provides application programming interfaces, or APIs, for search and Google Maps that other companies, including his own, have already used to integrate those Google services into their online offerings.

"The power of Google is that it is a Web service with APIs that allow it to adapt to many new markets," says Benioff. In other words, it already is a computing platform for other types of Web-based software. Benioff adds that he has no direct knowledge of any Google plans to compete directly with Salesforce.com, which in addition to selling its Web-based software for managing sales, also wants to become a computing platform for other enterprise applications.

Threatening the big players

Still, the specter of Google entering their space could accelerate the push by the largest enterprise software vendors such as SAP (Research) and Microsoft (Research) to deliver their own software products online. Indeed, SAP is expected to announce an online version of its customer-relationship management software today.

An online offering costs less to configure and run than conventional software. That makes this strategy the best way for these major software vendors to crack the market of small and medium business customers, who don't have the IT staffs or financial wherewithal to tackle a major enterprise software installation.

Many small businesses today use nothing more sophisticated than Microsoft Excel spreadsheets or Intuit's (Research) QuickBooks, if they use any software at all. An online accounting application, for instance, could give them more sophisticated features that are currently only available to larger corporations. Indeed, Intuit offers an online version of QuickBooks itself, and NetSuite, a company cofounded by Oracle (Research) CEO Larry Ellison, offers a variety of online small-business software applications.

It's unlikely that Web-based software will be dominated by a few players. Think of the range of small-business customers, from architects to plumbers to restaurant owners, as well as the diverse jobs they need software to do—payroll, inventory management, sales leads, you name it. Google could provide the underlying technology platform to support all of these applications. And if it does, thousands of entrepreneurs would flock to Google's platform to create and deliver those applications. The world of conventional, shrink-wrapped software would shudder.

Google's best option

But for Google to move beyond small business, which is its natural constituency, it would have to make a disruptive move – like expanding its partnership with IBM. And Big Blue might be game.

"We are definitely looking at other ways we can partner with Google," says IBM's Andrews. "We have talked to them about things like extending blog hosting to corporations and other services," he says, although he notes that nothing is imminent.

Of all the big tech companies, IBM is perhaps the least threatened by Google, since IBM's focus is on large corporate customers. IBM, in turn, could tap into Google's small-business constituency.

"Talk about a powerful partnership," says IDC's Gens. "It would bring hipness to IBM's brand and corporate gravitas to Google."

It would also help IBM put real weight behind its "on-demand" marketing campaign, which promises to transform business through Web-based software. Gens says that IBM has "not fully delivered" on that promise, and that this is a "prove-it year" in that regard. A Google partnership could help IBM reach down deeper to smaller businesses with on-demand software that any entrepreneur with a credit card could subscribe to.

"That is what the world is waiting for," says Gens. "The world wants a consulting army that's fused with technology, so you can get McKinsey ideas and fulfill them on a Google budget."

A small step toward such a partnership took place Wednesday, when IBM and Google, among others, announced their support for Ajax, a collection of technologies which make it easier for programmers to build powerful Web-based applications.

Beyond the programming code, the bigger hurdle for these prospective partnerships will be to get businesses to trust their sensitive data to Google. That may prove a challenge, given the Department of Justice's efforts to pry personal Web-search data out of Google.